Community ownership means that both spouses share equally in property owned or acquired during a marriage. In divorce, each spouse is entitled to half of the assets and debts. Exceptions include inherited property and prenuptial agreements. Assets include physical properties, money, collections, and potentially future earnings. When one spouse wants to keep something, they must pay the other half the value.
Community ownership is a term used in many states and in several countries to suggest that both spouses share equally in property owned or acquired in a marriage. If the marriage ends in divorce, or sometimes even in an annulment, each spouse is entitled to exactly half of the assets and half of the debts. Many US states have been community-owned states. If you marry in one of these states, or divorce in one, the assets you owned at the time of separation are subject to a 50/50 split.
Many people wonder if there are exceptions to community property laws that govern the division of property. There are actually a couple that are worth mentioning. Anyone who is the sole heir to property or assets may not have to count anything inherited as community property. In most cases, however, all things acquired during the marriage, including gifts to separated spouses, belong to both spouses. Also, the length of the marriage may not be taken into account when considering this split. Whether a marriage lasts a week, a few years, or many years, community property law applies in the states or countries where it is applicable.
The only way to avoid a 50/50 split of assets and assets is to create prenuptial agreements that state that a lower or higher amount of assets will be awarded to a particular spouse upon the dissolution of a marriage. When people enter into marriages with substantial real estate holdings, or if one spouse makes significantly more money than the other, spouses may agree to a fixed fund split that differs from the 50/50 split. Provided such an agreement does not violate any law, any divorce would follow the prenuptial agreement instead of following community property rules.
When there are minor children in the marriage, some acquired things are usually not considered under community property rules. For example, a child’s bed might technically be considered shared, but it probably wouldn’t be considered an estate and would go to the parent with custody. There may be some discussions about furniture, baby items, and the like if the parents have joint custody of the children.
Many people want to know exactly what “assets” are in relation to community property. A short list might include:
All physical properties, from real estate to cars, from appliances to furniture
All the money made during the marriage
Any money deposited in 401k, savings accounts or pensions
Any collections (art, stamps, other)
Any business started during the marriage
Any gift received from either spouse, unless inherited and not mixed with family funds
Any money in bank accounts, regardless of the account name
Any electronic equipment
Potentially future earnings from things done during the marriage. For example, if you sell a book during a marriage and it becomes a bestseller after a divorce, an ex-spouse could be entitled to half of the profits.
When one spouse really wants to keep something acquired during the marriage, and the other spouse does not dispute ownership, the new “owner” must still pay the spouse half the value of the thing possessed. When there are sizable assets, people can trade for things of equal value, but when there are few assets, the spouse who does not get the physical property must be repaid. “Real” value is usually defined as the value of something as currently valued; tends to mean not how much an item cost initially, but how much it could be bought because it has now sold.
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